Friday, September 26, 2008

Less Outrage and False Piety--More Repentance

Maybe I'm getting smarter or maybe I'm just getting old. But more and more I look at what's going on in the world and think the conventional wisdom and behavior is not just wrong but completely upside down.

That's certainly the way I felt watching Henry Paulson appear before two Congressional committees last week. There was a lot of outrage expressed during those hearings, but it seemed to me that the criticism was going in the wrong direction.

Unless I missed something, it was Congress that approved the combination of budgets, spending, and tax cuts that has led our country into near bankruptcy. And it was Congress that abdicated its oversight responsibilities as the agencies that regulate Wall Street and our banking system were neutered by the Bush Administration. It was Paulson who stepped in as Treasury Secretary just a couple years ago to try to sort out the mess.

It was appropriate that outrage be expressed during those hearings, but the criticism should have been directed from Paulson to the members of Congress. "What were you thinking when you approved these budgets? How could you let the President send a strong message to Wall Street that the regulators would look the other way as they leveraged up their companies, their clients, and the whole country to a point where disaster became almost inevitable." That's what he was entitled to say.

Instead, of course, the vitriol flowed the other way. Not a single member of the House or Senate began their questions and/or invectives by apologizing for the role they had personally played in allowing this disaster to happen. And, of course, not a single member of the news media pointed any of this out.

The irony is only compounded by the fact that the $700 billion rescue plan is referred to as a "bailout" when in fact it is far more of an investment opportunity that could enable the government to recoup some of the huge losses it has already suffered through its negligence of the last eight years.

That money would be used to buy substantially solid long term assets at fire sale prices from financial institutions who are desperate and starved for liquidity. Warren Buffet has said he would love to be able to borrow $700 billion to pick off the merchandise that our government would be buying because he thinks he would make a big profit.

Much has been made about the government takeover of AIG, Fannie Mae, and Freddie Mac. I haven't seen a single article or news report mentioning that during the last week, the stocks of all three of those companies skyrocketed to levels which would give the U.S. government a huge profit on those investments.

This plan is not a bailout of Wall Street. Every company that has been "bailed out" has provided the government--or J.P. Morgan Chase which bought Bear Stearns--a nice profit. J.P. Morgan stock is up by 15% since it bought Bear Stearns, despite the worsening financial crisis. The shareholders and employees of every company that has been "bailed out" have lost virtually their entire original investment.

Are there any journalists left in the world to point this out or is it just me?

But I have always had a problem with misplaced outrage and false piety.

When I first started studying Jewish texts and wisdom in a serious way 20 years ago, I was encouraged by several of my teachers to start wearing a kippah--the skull cap worn by traditional Jews--when I went to the synagogue or Jewish community events. The wearing of kippot is a tradition--not mandated in the Hebrew Bible--design to constantly remind us that we are accountable to a higher authority for all our actions.

So I started wearing a kippah for a while but not in the synagogue. Instead I wore it in my office where I worked as a financial adviser. Why in the world would I wear it in synagogue where I was in no danger of doing any harm to anyone? Where I really was challenged was in my work where I was making investment decisions for people who were counting on me to secure their family's financial future. That's where all the challenge and temptation lurked. I never understood the mainstream thinking on this and still don't.

By the way, it's not just a Jewish thing. I now occasionally go to mass in Greenwich CT with my wife and her family where I am told to be on my best behavior and use my "inside voice." Being raised as a first born Jewish son, I was never told to behave and I didn't know what an inside voice was. But think about it. Wouldn't it be better to just chill out in church and then use your inside voice and behave really well the rest of the week when you are out in the world and can do some real damage?

Anyway, as luck would have it, we Jews are approaching the New Year season where we are supposed to repent for our sins and negotiate with God for the right to be included in the Book of Life for another year.

I would like to see our Congress draw on the spirit and lessons of the Jewish High Holidays and do some serious self-examination and repentance. Put the outrage and false piety in a sock and leave it there. Let's hear a little more honesty about your shortcomings and sins as you entreat God and your voters to allow you more time on earth and in office.

I would also plead with the journalists who have gone in to hiding to please come back and be part of the solution instead of exacerbating the problem.

As for me, I will just wish you all a happy and healthy new year and pray that either I or the rest of the world be given a better understanding of what is really going on.

About Me

Larry Gellman is a Financial Advisor, Jewish community leader, former TV news reporter, and observer of the human condition.
He has been cited as one of the nation's top money managers by a national investment publication.
He has chaired and served on the boards of a number of major Jewish organizations and has lectured in the U.S. and Israel on the subject of Judaism and Business Ethics.